Mortgage

PERCENTAGE OF HOMES IN FORECLOSURE DROPS NATIONWIDE



The percentage of homes in foreclosure dropped nationwide last month, although the percentage of borrowers behind on their payments increased slightly, the Los Angeles Times reported today. In a sign of continued recovery in the housing market, about 3.44 percent of mortgages were in some stage of the foreclosure process in December, according to Lender Processing Services Inc., a mortgage and consumer loan processing firm. That represents a nearly 2 percent decline from November and a roughly 18 percent drop-off from a year earlier. The percentage of mortgages that are 30 days or more past due stood at 7.17 percent last month, a 0.74 percent increase from November, LPS reported. Still, that rate declined 9 percent when compared with the same month in 2011. Read more.

COMMENTARY: BANK REFORM TAKES ONE FLAWED STEP FORWARD



While the Financial Accounting Standards Board (FASB) issued a draft of a new rule to change the way banks build reserves against losses on loans, the proposed rule is flawed conceptually and in its application, according to a Wall Street Journal commentary by Eugene A. Ludwig, CEO of the Promontory Financial Group and former Comptroller of the Currencey, and Paul Volcker, former chairman of the Federal Reserve System and namesake of the Volcker Rule included in the Dodd-Frank Act. It is a positive sign, according to the commentary, that the FASB recognizes that its existing rules on the Allocation for Loan and Lease Losses may have worsened the 2008 financial crisis. These rules limited bank reserves to those that are already "incurred." This all but ensures that banks' rainy day funds will be too skinny, particularly in periods when credit markets are under stress. The FASB's draft proposal to reform these rules incorporates what is known as the "Current Expected Credit Loss Model." It is meant to expand reserves to reflect losses that are expected over the life of the loan, and it is a big improvement over the existing regime. But as it stands, the proposal could create risks for the financial system as it could hurt small banks and their customers, according to the commentary. In an effort to ensure that everything is "auditable," the proposal ties the loan-loss reserve to what the accounting profession will decide is an acceptable "model." While the proposal is well-intentioned and makes clear that various models can be used, this model-driven approach is dangerous. Click here to read the full commentary. (Subscription required.)

FINANCIAL CRISIS SUIT SUGGESTS MORGAN STANLEY KNEW OF BAD INVESTMENTS



Hundreds of pages of internal Morgan Stanley documents, released publicly last week in a case against Morgan Stanley brought by a Taiwanese bank, shed much new light on what bankers knew at the height of the housing bubble and what they did with that knowledge, the New York Times DealBook blog reported today. The lawsuit concerns a $500 million collateralized debt obligation called Stack 2006-1, created in the first half of 2006. The documents suggest a pattern of behavior larger than this one deal: People across the bank understood that the American housing market was in trouble. They took advantage of that knowledge to create and then bet against securities and then also to unload garbage investments on unsuspecting buyers. Morgan Stanley is fighting the lawsuit, contending that the buyers were sophisticated clients and could have known what was going on in the subprime market. Read more.

LIBOR SUIT LIST SHOWS BARCLAYS PROBE SPANNED NY TO TOKYO



Barclays Plc senior executives, dozens of traders and the bank’s chief economist were all identified by regulators in a probe into interest-rate rigging that spanned continents, according to documents released in the U.K.’s first Libor-manipulation lawsuit, Bloomberg News reported today. Barclays is being sued by affiliates of Guardian Care Homes Ltd. that claim that an interest-rate swap should be annulled because it is linked to Libor, which Barclays tried to rig. Judge Julian Flaux in London rejected a bid by a group of employees identified in the Libor documents to prevent their names from being published ahead of a trial later this year. Among those identified in connection with the case were former Chief Executive Officers Robert Diamond and John Varley, and Jerry Del Missier, the bank’s former chief operating officer. The list of names, which Judge Flaux in London said had to be turned over to Guardian, was compiled from evidence that Barclays provided in the regulatory probes that led a 290 million-pound fine ($457.5 million) in June. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: AMR MAKE-WHOLE OPINION VULNERABLE ON APPEAL



The case of the week on the Bloomberg bankruptcy video is the decision by Bankruptcy Judge Sean Lane who concluded that American Airlines is not obliged to pay several hundred million dollars in make-whole premiums even though debt would be repaid before maturity. Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss how Lane's adverse ruling evidently was expected by the debt holders who believe the result may be better on appeal, if the dispute does not become moot in the meantime. Click here to watch.

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!



An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

CURRENT ISSUES FOR FINANCIAL ADVISORS IN BANKRUPTCY CASES AT ABI'S 31ST ANNUAL SPRING MEETING



The 2013 Annual Spring Meeting, to be held April 18-21, 2013, at the Gaylord National Resort and Convention Center in National Harbor, Md., features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

• Creditors’ Committees and the Role of Indenture Trustees and Related Issues

• The Individual Conundrum: Chapter 7, 11 or 13?

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• Law Firm Bankruptcies

• How to Be a Successful Expert

• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Register today!

ABI IN-DEPTH

ABI LIVE WEBINAR: REVISITING RADLAX AND HALL – NEW LEGAL AND PRACTICAL IMPACT OF THE DECISIONS



See why this was the top-rated panel at the ABI Winter Leadership Conference last month! Join the expert panel on Feb. 19 from 12:00-1:15pm EST as the summarize and discuss the legal impact and practical implications of the Supreme Court’s 2012 decisions in Radlax and Hall. Participants include:

• Susan M. Freeman of Lewis and Roca LLP (Phoenix)

• Adam A. Lewis of Morrison & Foerster LLP (San Francisco)

• Prof. Charles J. Tabb of the University of Illinois College of Law (Champaign, Ill.)

• Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

LATEST CASE SUMMARY ON VOLO: MASSACHUSETTS DEPT. OF UNEMPLOYMENT ASSISTANCE V. OPK BIOTECH LLC (IN RE PBBPC INC.; 1ST CIR.)



Summarized by Hale Yazicioglu, Bartlett Hackett Feinberg P.C.

The First Circuit BAP, adopting the expansive definition of “interest” in § 363(f) of the Bankruptcy Code, held that “interest” in § 363(f) includes all obligations that may flow from ownership of property, including the right to tax the purchaser of the debtor’s assets at the same high rate imposed on the debtor. The First Circuit BAP first evaluated its jurisdiction on appeal and found that the bankruptcy court order approving the stipulation entered into between the parties effectively terminated the litigation, and therefore was a final judgment from which the parties could appeal to the BAP.

There are more than 700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: THIRD CIRCUIT REJECTS WAIT-AND-SEE VALUATION APPROACH AND ACCEPTS LIENSTRIPPING IN § 506(a)



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines In re Heritage Highgate, Inc., in which the Third Circuit held that the fair market value of property as of the confirmation date controls whether or not a lien is fully secured. Additionally, the court held that lienstripping is permissible in a chapter 11 reorganization.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI'S INDUBITABLE EQUIVALENTS: TELL US A TUNE AND WE'LL SING YOU THAT SONG!



ABI's Indubitable Equivalents need your help: Tell us your favorite Rock and Roll tune - that elusive classic that takes you back, makes your feet tap, your head bang, and your horns come out! If we pick your song, you get widespread promotion by the band and you'll receive a free CD of IE’s greatest hits!

To enter, log onto www.abiband.com or “like” the Band’s Facebook page.

The fine print: No purchase necessary. You can enter as many times as you want. Multiple winners will be selected. Winners will be announced on the IE website and on Facebook. Entry deadline: January 31.

ABI Quick Poll

After Stern, bankruptcy courts do not have the constitutional authority to enter final judgments on fraudulent conveyance claims.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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Join our networks to expand yours.

2013

February

- Caribbean Insolvency Symposium

     February 7-9, 2013 | Miami, Fla.

- ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions

     February 19, 2013

- VALCON 2013

     February 20-22, 2013 | Las Vegas, Nev.

March

- 37th Annual Alexander L. Paskay Seminar on Bankruptcy Law and Practice

     March 7-9, 2013 | St. Petersburg, Fla.

- Bankruptcy Battleground West

     March 22, 2013 | Los Angeles, Calif.

April

- Annual Spring Meeting

     April 18-21, 2013 | National Harbor, Md.

FOURTH CIRCUIT RULES THAT BORROWER MAY SUE AFTER THREE YEARS TO RESCIND MORTGAGE LOAN



The U.S. Court of Appeals for the Fourth Circuit has held that a lawsuit seeking rescission is timely where the consumer provided notice of rescission to the subservicer within three years of closing but did not file suit until after the three-year deadline had passed, according to a Ballard Spahr Legal Alert today. The May 3, 2012, decision in Gilbert v. Residential Funding LLC is the first by a federal appellate court to hold that a borrower need only send notice of rescission within the three-year period to validly exercise a right to rescind. The majority of courts to consider the question—including the Third and Ninth Circuits—have held that the requirement for the borrower to file suit within the three-year period is consistent with the language of §1635 of the Truth in Lending Act and prior precedent, including the U.S. Supreme Court's decision in Beach v. Ocwen Federal Bank. In its opinion, the Fourth Circuit rejected the subservicer’s reliance on Beach, observing that Beach "did not address the proper method of exercising a right to rescind or the timely exercise of that right" but only addressed whether §1635 was a statute of limitations that operated to extinguish the right after three years. Click here to read the full analysis.

For more on this case, including a full copy of the opinion, make sure to visit ABI’s Volo site.

LAWMAKERS PUSH TO EASE HOME REFINANCING



Senate Democrats today tried to drum up support for a plan that aims to boost the number of struggling homeowners able to refinance by allowing those with government-backed loans to win new loans, Reuters reported. Senator Robert Menendez (D-N.J.) circulated a draft bill outlining proposed changes to the Obama administration's Home Affordable Refinance Program during a Senate Banking Committee hearing today on the topic of home refinancing. The draft bill would provide streamlined financing options for homeowners who are current on their payments and have loans owned or guaranteed by Fannie Mae and Freddie Mac, the two government-controlled companies that have been propped up by more than $150 billion in taxpayer aid. However, it excludes a key piece of the White House plan that would let homeowners refinance into loans backed by the Federal Housing Administration, the U.S. government mortgage-insurer, even if their current loans are not backed by the government. More than 17.5 million borrowers with loans backed by Fannie Mae and Freddie Mac currently pay more than 5 percent interest, according to the draft, while mortgage rates are averaging under 4 percent currently nationwide. Many of those borrowers have been unable to access government initiatives such as HARP. Read more.

LOCKHART: FANNIE MAE REFUSED TO PUNISH COUNTRYWIDE FOR BAD DEBT



James Lockhart, who led the Federal Housing Finance Agency until 2009 and its predecessor, the Office of Federal Housing Enterprise Oversight, said that Fannie Mae refused to seek large amounts of mortgage repurchases from Countrywide Financial Corp. as the housing market began to crash, Bloomberg News reported yesterday. Lockhart said that he spent a lot of time pushing Fannie Mae executives to seek more “putbacks” on Countrywide loans that failed to match their promised quality. "They didn’t want to offend their largest customer," Lockhart, now the vice chairman at investment firm WL Ross & Co., said yesterday. "If people had known how bad the repurchases were going to get, we’d certainly have had a lot more disciplined underwriting," Lockhart said. Read more.

CONSUMER CREDIT INCREASES BY MOST IN 10 YEARS



Consumer borrowing in the U.S. surged in March by the most in more than a decade on growing demand for educational financing and autos, Bloomberg News reported yesterday. Credit rose by $21.4 billion, the biggest gain since November 2001, to $2.54 trillion, according to Federal Reserve figures released yesterday. The advance was paced by a $16.2 billion jump in non-revolving debt, including student and car loans. Read more.

SENATE BALKS AT TAKING UP STUDENT LOAN BILL



With federal student loan interest rates set to double July 1, the Senate failed yesterday to get enough votes to take up a bill to extend low 3.4 percent rates for another year, CNNMoney.com reported. The vote was 52-45 to take up the bill, 8 fewer than the 60 needed to officially start debating the bill. Senate Republicans and Democrats are still negotiating a compromise, and the Senate could vote again this week. Many lawmakers in both parties agree that they would like to extend the current 3.4 percent rates for another year. They disagree, however, on how to offset the $6 billion it would cost to do so. House Republicans passed a measure that would pay for extending the lower student loan rate by cutting from a health care fund that promotes preventive care. President Obama vowed to veto that bill. President Obama and Senate Democrats want to pay for the measure by eliminating some tax benefits for small business owners. Read more.

In related news, a report found that the U.S. Education Department must step up its oversight of private student-loan debt collectors, improving the tracking of borrower complaints and changing its commission system to reward customer service, the San Francisco Chronicle reported today. Contractors hired by the government to chase defaulted borrowers fail to maintain "fair and efficient" systems to track complaints, according to the report, released yesterday by the National Consumer Law Center, a nonprofit advocacy group. The department weighs collection, rather than complaints, too heavily in awarding contracts, it said. With $67 billion of student loans in default, the Education Department has hired 23 private debt-collection companies to chase borrowers. They include Pioneer Credit Recovery, a unit of SLM Corp., the largest student-loan company, also known as Sallie Mae. In the year ended in September, the department received 1,406 complaints against the debt collectors, up 41 percent from the year before. Read more.

REGULATORS SEEK ALTERNATE PLANS ON MONEY MARKET FUNDS



Federal regulators are increasingly worried that the Securities and Exchange Commission could fail to complete more-stringent rules on money-market mutual funds, forcing officials to confront how else to rein in the $2.6 trillion industry, the Wall Street Journal reported today. While financial regulators would prefer the SEC to act on its own, some officials behind the scenes have started to investigate whether the Financial Stability Oversight Council, a special panel created by the 2010 Dodd-Frank financial overhaul, could act if the SEC can't agree on a proposal to shore up funds or reduce risk. Regulators' consideration of alternatives comes as the SEC has met internal and external snags in its efforts to complete a proposal aimed at reducing both money funds' vulnerability to credit shocks and investor incentives to flee the funds at the first sign of trouble. SEC Chairman Mary Schapiro has directed the campaign, which comes on top of an initial round of rule-tightening for the funds in 2010. Her proposals would limit investors' ability to sell all their funds immediately and change how the funds are priced. Read more. (Subscription required.)

REGISTER FOR THE LABOR & EMPLOYMENT COMMITTEE'S "EVOLVING LABOR ISSUES IN CHAPTER 11" WEBINAR



Make sure to mark your calendars for May 23 from 2-3 p.m. ET for the ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar. A panel of experts will be discussing recent developments in several large complex bankruptcy cases, including Hostess, Kodak, Nortel and American Airlines. The expert panel includes Babette A. Ceccotti of Cohen, Weiss & Simon LLP (New York), former chief counsel of the PBGC Jeffrey B. Cohen of Bailey & Ehrenberg PLLC (Washington, D.C.), Marc Kieselstein of Kirkland & Ellis LLP (New York) and Ron E. Meisler of Skadden, Arps, Slate, Meagher & Flom LLP.
Issues to be discussed include:

• Hostess' efforts to eliminate their multi-employer pension plan contribution liability through motions to reject their labor agreements under Section 1113.

• Kodak's attempt to terminate retiree health benefits.

• The effect of the automatic stay upon efforts by the U.K. Pension Protection Fund and the U.K. Nortel Pension Plan to enforce its powers under the U.K. Pensions Act.

• American Airlines' efforts to reduce legacy costs in bankruptcy.

Click here to register.

U.S. TRUSTEE PROGRAM RE-OPENS COMMENT PERIOD ON PROPOSED GUIDELINES FOR ATTORNEY COMPENSATION IN LARGE CHAPTER 11 CASES



The U.S. Trustee Program has re-opened the comment period until May 21, 2012, on proposed guidelines for reviewing applications for attorney compensation in large chapter 11 cases ("fee guidelines"). The USTP also scheduled a public meeting for June 4, 2012, at the U.S. Department of Justice in Washington, D.C. on the proposed fee guidelines. Click here for more information on submitting comments or attending the public hearing.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: GILBERT V. RESIDENTIAL FUNDING LLC (4TH CIR.)



Summarized by ABI Deputy Executive Director Amy Quackenboss

A lawsuit seeking rescission of a mortgage loan is timely under the Truth in Lending Act where the consumer provided notice of rescission to the subservicer within three years of closing but did not file suit until after the three-year deadline under the TILA had passed. The Fourth Circuit rejected the subservicer's reliance on the U.S. Supreme Court's desicion in Beach v. Ocwen Federal Bank, observing that Beach "did not address the proper method of exercising a right to rescind or the timely exercise of that right" but only addressed whether 15 U.S.C. §1635 was a statute of limitations that operated to extinguish the right after three years.

Nearly 500 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: CONGRESS ASKING TOO MUCH OF BANK REGULATORS



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post discusses whether Congress is piling on too many rules for regulators to enforce without proportionately increasing the number or competence of examiners in the aftermath of the financial crisis.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

The debtor-in-possession model has proven too susceptible to abuse; a trustee should be appointed in every chapter 11 case, at least as a check on a DIP with more limited management authority. Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

May

- New York City Bankruptcy Conference

     May 9, 2012 | New York, N.Y.

- ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar

     May 23, 2012



June

- Memphis Consumer Bankruptcy Conference

     June 1, 2012 | Memphis, Tenn.

- Central States Bankruptcy Workshop

     June 7-10, 2012 | Traverse City, Mich.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 12-15, 2012 | Bretton Woods, N.H.

- Southeast Bankruptcy Workshop

     July 25-28, 2012 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

REGULATORS AND 13 BANKS COMPLETE $9.3 BILLION DEAL FOR FORECLOSURE RELIEF



Federal banking regulators have reached a $9.3 billion pact with 13 major lenders to settle claims of foreclosure abuses like bungled loan modifications and flawed paperwork, the New York Times DealBook blog reported today. The settlement is made up of $3.6 billion in cash relief and $5.7 billion in relief to avert foreclosures. Under the deal, homeowners can receive up to $125,000 in cash relief. Despite the banner numbers in the settlement, consumer groups and a range of lawmakers have criticized it for not providing enough relief for aggrieved homeowners. The agreement formalizes the tentative deals that were reached in January between the mortgage servicing companies and the regulators from the Office of the Comptroller of the Currency and the Federal Reserve. Read more.

FORECLOSURE SALES IN 2012 HIT LOWEST MARK IN FIVE YEARS



While 2012 had the fewest foreclosure-related sales of homes since 2007, RealtyTrac released figures today showing that levels remained far higher than before the bursting of the housing-market bubble, MarketWatch.com reported today. Almost 950,000 U.S. properties in some state of foreclosure or owned by a bank were sold in 2012, down 6 percent from the prior year, according to RealtyTrac, an online foreclosure marketplace. Despite the decline, these sales remain far above the pre-bubble-burst levels: There were about 46,000 foreclosure-related sales in 2005, according to RealtyTrac. Foreclosure-related sales made up about 21 percent of all U.S. residential sales last year, down from 23 percent in the prior year, but much greater than the roughly 1 percent of foreclosure sales in 2005. Meanwhile, properties sold as short sales rose 4 percent from the prior year. These short sales made up about 22 percent of all residential sales last year. Read more.

CFPB DECELERATES REVIEW OF CHECKING OVERDRAFT RULES



The Consumer Financial Protection Bureau (CFPB), which last year began exploring whether to tighten rules on checking overdraft fees, has decided against quick action after hearing from smaller U.S. banks that rely on the revenue, Bloomberg News reported today. The bureau announced Feb. 22, 2012, that it was collecting data on overdraft practices and would complete the inquiry by the end of 2012. Nine large banks, including Bank of America Corp., U.S. Bancorp and Regions Financial Corp., are providing information. This month, CFPB director Richard Cordray said that no decisions have been made about possible new rules, adding that "over the next couple of years" the agency will continue to work on the matter. Camden Fine, president of the Independent Community Bankers of America, said revenue from overdraft fees represents 3 percent to 15 percent of total income for institutions in his association. In 2011, bank customers paid $31.6 billion in overdraft fees, down from $33.1 billion in 2010, according to Moebs Services, a research firm. About 15 million Americans overdraw their accounts 10 or more times a year, Moebs reported. Read more.

COMMENTARY: "TOO BIG TO FAIL" RULES HURTING "TOO SMALL TO COMPETE" BANKS



Almost five years have passed since governments in Europe, the U.K. and the U.S. used about $600 billion in capital to shore up banks during the worst financial crisis since the Great Depression, and regulators are still trying to ensure that it never happens again, according to a Bloomberg News commentary today. "With all the debating going on, the financial market structure didn't change very much," Zhu Min, the International Monetary Fund's deputy managing director, said in January. Some say the industry's biggest banks should be forced to break up, including Sanford Weill and John Reed, who created New York-based Citigroup Inc. They have said that financial conglomerates could be more valuable and safer if split apart. So have former Merrill Lynch & Co. Chief Executive Officer David Komansky and former Morgan Stanley CEO Philip Purcell. Investors such as Joshua Siegel, founder and managing principal at New York-based StoneCastle Partners LLC, see bigger changes at the other end of the spectrum. Small banks will seek mergers because their management teams are aging and new regulations are too costly to bear, he says. JPMorgan's Jamie Dimon, a critic of regulations he views as unnecessary or excessive, has recently touted the benefits. He told Citigroup analysts this month that new rules will help banks such as JPMorgan, the largest in the U.S., win market share from smaller competitors, the analysts wrote in a report. Read more.

ANALYSIS: FOR SEC, A SETBACK IN BID FOR MORE TIME IN FRAUD CASES



The Supreme Court yesterday delivered a swift and decisive rejection of the Securities and Exchange Commission's argument that it should operate under a more forgiving statute of limitations in pursuing penalties in fraud cases, the New York Times DealBook blog reported yesterday. As a result of the decision, the agency will have to find a long-term solution to give itself more time to investigate cases. In Gabelli v. Securities and Exchange Commission, Chief Justice John G. Roberts Jr. wrote in the unanimous decision rejecting the SEC's argument that a federal statute that limits the government's authority to pursue civil penalties should commence when a fraud is discovered, not when it occurs. The SEC was hoping that the court would apply what is known as the "discovery rule." In 2010, the Supreme Court endorsed this rule in a private securities fraud class-action suit, Merck & Co. v. Reynolds, stating that "something different was needed in the case of fraud, where a defendant's deceptive conduct may prevent a plaintiff from even knowing that he or she has been defrauded." In the Gabelli case, the SEC filed fraud charges in 2008 against mutual fund manager Marc Gabelli and a colleague, Bruce Alpert, saying that they had violated the Investment Advisers Act of 1940 for permitting an investor to engage in market timing. In its complaint, the SEC sought civil monetary penalties based on market timing that it claimed had taken place from 1999 to 2002, which resulted in the preferred investor purportedly reaping significant profits while ordinary investors suffered large losses. Read more.

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: SECRET MADOFF AGREEMENT MAY HARM VICTIMS



Money stolen from victims of the Bernie Madoff Ponzi scheme is earmarked for someone who may have been an accomplice in the fraud, and the agreement is being kept secret by a federal district judge. That's the first item on the new video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to view.

DON’T MISS THE ABI LIVE WEBINAR ON APRIL 5 - "LEGACY LIABILITIES: DEALING WITH ENVIRONMENTAL, PENSION, UNION AND SIMILAR TYPES OF CLAIMS"



A panel of experts has been assembled for a webinar on April 5 from 1-2:15 p.m. ET to discuss environmental and pension liabilities, the statutory schemes under which these liabilities arise and the key players involved. Are non-monetary environmental claims dischargeable? Do post-petition expenditures for environmental cleanup constitute administrative expenses? When can an employer terminate a pension plan in bankruptcy, what is the process and what are the consequences? Learn the answer to these questions and more from the comfort of your own office. Special ABI member rate is available! Register here as this webinar is sure to sell out.

ABI'S ANNUAL SPRING MEETING: CONSUMER PROGRAMMING WITH CROSS-OVER APPEAL



With four session tracks looking at issues geared toward chapter 11 restructurings, financial advisors, professional development and consumer bankruptcy, a number of sessions at ABI's Annual Spring Meeting have cross-over appeal for both consumer and business practitioners. Sessions include:



• The Appellate Process: This distinguished panel will explore recent issues in appellate practice that are of interest to both consumer and business practitioners, including the ability to bypass intermediary appellate courts and take appeals directly to the circuit courts.

• Consumer Class Actions: This panel will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases, which are highlighted by two recent decisions of the Fifth Circuit. Many of the issues discussed during this panel will be useful in business cases as well.

• The Individual Conundrum - Chapter 7, 11 or 13?: Deciding on the appropriate chapter for a high net worth individual contemplating a bankruptcy filing can be a daunting task. This panel will explore the considerations that guide the practitioner in advising individual clients in making this decision.

To register for the Annual Spring Meeting and to see the full schedule of program tracks and events, please click here.

ABI IN-DEPTH

MARK YOUR CALENDARS FOR APRIL 10 TO TAKE PART IN ABI’S LIVE WEBINAR "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS – BUT DOES CONGRESS?"



Do not miss the "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?" webinar presented by ABI's Consumer Bankruptcy Committee on April 10 from noon-1:15 ET. ABI's panel of experts will provide an overview of the student loan industry, examine the numbers behind and causes of student loan debt, and discuss federal loan programs as well as federal consolidation and forgiveness programs. Faculty on the webinar includes:

• Prof. Daniel A. Austin of Northeastern University School of Law (Boston)
  
  
  
• Edward "Ted" M. King of Frost Brown Todd LLC (Louisville, Ky.)
  
  
  
• Craig Zimmerman of the Law Offices of Craig Zimmerman (Santa Ana, Calif.)

CLE credit will be available for the webinar. This webinar is sure to sell out; register now for the special ABI member rate of $75!

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!



An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: CLINTON AVENUE CLO FUND LTD. V. BANK OF AMERICA, N.A. (11TH CIR.)



Summarized by Weston Eguchi of Willkie Farr & Gallagher LLP

Affirming the district court's rulings, the Eleventh Circuit concluded that (A) the plaintiff term lenders lacked standing to enforce the defendant revolving lenders' promise to lend to borrowers under a credit agreement; and (B) summary judgment on the issue of whether the revolving lenders were required to fund under the credit agreement was inappropriate where the relevant contractual language was ambiguous such that consideration of extrinsic evidence of the parties' intent would be necessary.

There are more than 750 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: ASSIGNMENT OF RENTS: SIXTH CIRCUIT THROWS OUT DEBT-BUYER SETTLEMENT

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new blog post reported that the Sixth Circuit recently threw out a nationwide settlement involving Midland, a robo-signing debt buyer, and more than a million consumers. This will allow other class and individual actions to proceed against Midland. The suit was thrown out for faulty notice to class members, who were not told in the settlement notice that they’d lose their individual fraud claims against Midland.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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2013

March

- 37th Annual Alexander L. Paskay Seminar on Bankruptcy Law and Practice

     March 7-9, 2013 | St. Petersburg, Fla.

- Bankruptcy Battleground West

     March 22, 2013 | Los Angeles, Calif.

April

- ABI Live Webinar: "Legacy Liabilities : Dealing with Environmental, Pension, Union and Similar Types of Claims"

     April 5, 2013

- ABI Live Webinar: "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?"

     April 10, 2013

- "Nuts and Bolts" Program at ASM

     April 18, 2013 | National Harbor, Md.

- Annual Spring Meeting

     April 18-21, 2013 | National Harbor, Md.

May

- "Nuts and Bolts" Program at NYCBC

     May 15, 2013 | New York, N.Y.

- ABI Endowment Cocktail Reception

     May 15, 2013 | New York, N.Y.

- New York City Bankruptcy Conference

     May 16, 2013 | New York, N.Y.

- Litigation Skills Symposium

     May 21-24, 2013 | Dallas, Texas

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

     June 13-16, 2013 | Grand Traverse, Mich.

FORECLOSURE SETTLEMENT WITH BANKS FILED IN FEDERAL COURT



The court-appointed monitor of a $25 billion U.S. settlement with five banks over abusive foreclosure practices said that he is hoping consumer advocates will let him know if banks are not complying, Bloomberg News reported yesterday. Joseph A. Smith Jr., who left his position as North Carolina's banking commissioner to take the monitoring job, said that he has set up a website where housing counselors, bankruptcy lawyers and other advocates can report problems. "I am hopeful that we will get additional input in terms of our review of the banks' work from out in the field," Smith said. He added that he is working on setting up uniform standards for monitoring compliance at each bank and has hired BDO Consulting to help. The settlement agreement, filed in federal court in February, was reached after attorneys general from all 50 states announced a probe into foreclosure practices following disclosures that banks were using faulty documents to seize homes. The nation's five largest mortgage servicers – Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. – negotiated the agreement with federal agencies, including the Justice Department, and 49 states. Read more.

ANALYSIS: MORTGAGE-MODIFICATION PROGRAM MANAGES TO BEAT CRITIC'S FORECAST



While government's efforts to stem the housing crisis have fallen short of the sweeping plan outlined shortly after President Barack Obama took office, the Home Affordable Modification Program (HAMP) has now eclipsed a prediction made by one of the program’s critics, the Wall Street Journal reported today. In December 2010, the Congressional Oversight Panel, which oversaw the 2008 financial rescue, predicted that the HAMP program would only prevent 700,000 to 800,000 foreclosures. The report added that the program’s prospects "are unlikely to improve substantially in the future." But as of April, the three-year-old HAMP program has actually eclipsed that forecast, having helped nearly 802,000 U.S. homeowners avoid losing their homes through permanent loan modifications, up about from around 795,000 in March, according to Treasury Department statistics released yesterday. Under the HAMP program, the government pays lenders incentives to help borrowers avoid foreclosure by reducing their mortgage payments. Due to low enrollment, only about $3.23 billion has been spent on the effort out of a possible $30 billion from the 2008 financial industry rescue, according to Treasury statistics. Read more. (Subscription required.)

MORTGAGE RATES IN U.S. FALL TO RECORD LOWS WITH 30-YEAR LOANS AT 3.67 PERCENT



Mortgage rates in the U.S. dropped to record lows for a sixth straight week as concerns over slowing job growth pushed investors into the safety of government bonds that guide interest costs, Bloomberg News reported today. The average rate for a 30-year mortgage dropped to 3.67 percent in the week ended today from 3.75 percent, Freddie Mac said. It was the lowest in the McLean, Va.-based mortgage-finance company's records dating to 1971. The average 15-year rate declined to 2.94 percent, also a record, from 2.97 percent. The 10-year Treasury yield, a benchmark for mortgages, slipped to less than 1.5 percent for the first time on June 1 after a Labor Department report showed that U.S. payrolls climbed by 69,000 last month, the fewest in a year. Read more.

WHITE HOUSE SKEPTICAL OF GOP STUDENT LOAN PROPOSALS



The Obama administration on Tuesday brushed off Republican proposals to pay for the $6 billion extension of the reduced-rate student-loan program, which expires July 1, the Washington Post reported yesterday. GOP House leaders last week sent the president a set of proposals to cover the cost of the extension that included increasing the amount paid by federal employees for their retirement and limiting the ability of states to recoup Medicaid costs through taxes on providers. "We're not going to trade off student loans for other vital, vital programs," Vice President Joe Biden said after meeting with 10 college presidents to discuss an administration effort to increase transparency in the information students receive on loan packages. The looming deadline presents a tricky proposition for Obama, who has called the student-loan issue critically important for the 7.4 million people who have the subsidized Stafford loans. Both the administration and GOP leaders want to freeze the interest rate at the current 3.4 percent and avoid an average fee hike of $1,000 per student when the rate doubles to 6.8 percent. But the two sides remain deadlocked over how to pay for the plan. Read more.

Make sure to listen to ABI's latest podcast featuring scholars debating current issues of student debt and bankruptcy.

FORMER BEAR STEARNS EXECUTIVES AGREE TO SETTLE SHAREHOLDER SUIT FOR $275 MILLION



Former senior executives of Bear Stearns Cos., including former chief executives James E. Cayne and Alan D. Schwartz, have agreed to settle a shareholder suit for $275 million, the Wall Street Journal reported today. The 2008 lawsuit, led by the State of Michigan Retirement Systems, had accused the executives of misleading investors about the firm's business and financial well-being in the run-up to the financial crisis. The proposed cash settlement was disclosed in papers filed in a federal court yesterday. Bear Stearns was acquired in a last-minute rescue by JPMorgan Chase & Co. in March 2008, with assistance from the Federal Reserve, after nearly collapsing during the subprime-mortgage meltdown. Read more. (Subscription required.)

ABI IN-DEPTH

WEBINAR ON JUNE 26 TO EXAMINE SUPREME COURT'S RULING IN RADLAX CASE



Having already examined the oral argument in a previous ABI media teleconference, panelists will reconvene for an ABI and West LegalEd Center webinar on June 26 to discuss last week's Supreme Court ruling in RadLAX Gateway Hotel LLC v. Amalgamated Bank. CLE credit will be available for the webinar, which will be held from 2:00-3:30 p.m. ET.

Experts on the program include:

• David Neff of Perkins Coie LLP (Chicago), the counsel of record for petitioner RadLAX Gateway Hotel LLC and participant in the argument.

• Jason S. Brookner of Andrews Kurth LLP (New York), whose article was cited in the brief for the respondent.

• Prof. Charles Tabb, the Alice Curtis Campbell Professor of Law at the University of Illinois College of Law, who recently published a paper titled "Credit Bidding, Security, and the Obsolescence of Chapter 11."

ABI Resident Scholar David Epstein will be the moderator for the webinar.

The webinar costs $115 and purchase provides online access for 180 days. If you are purchasing a live webcast, you will receive complimentary access to the on-demand version for 180 days once it becomes available. Click here for more information.

LATEST CASE SUMMARY ON VOLO: KLINE V. DEUTSCHE BANK NATIONAL TRUST CO. (IN RE KLINE; 10TH CIR.)



Summarized by David Little of Onsager, Staelin & Guyerson, LLC

Affirming the bankruptcy court, a three judge panel of the Tenth Circuit BAP held that (1) a foreclosing creditor did not willfully violate the automatic stay by serving an amended foreclosure complaint after a debtor filed a chapter 13 petition, but without notice of the bankruptcy and ceasing all actions against the debtor upon learning of the bankruptcy; and (2) following the Rooker-Feldman doctrine, the bankruptcy court could not consider whether foreclosure after lifting the stay was proper based on service of the amended foreclosure complaint being void. The panel ruled that the creditor's actions of continuing the foreclosure action and not re-serving the amended complaint occurred after the automatic stay was lifted and thus by definition could not be violations. The panel further ruled that success on the debtor’s claim that the creditor willfully violated the automatic stay necessarily required review of a state court’s foreclosure judgment and thus barred the bankruptcy court from considering the effect of the void service of the amended foreclosure complaint.

More than 500 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SIGTARP SCRUTINY GOES BEYOND TARP MATTERS



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post finds that, contrary to popular belief, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) is not confined to scrutinizing those crimes that relate directly to the request for or use of TARP funds, and the office appears poised to increase the scope of its activity.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

First-day orders authorizing full and immediate payment of the claims of ‘critical vendors’ should be prohibited; all pre-petition unsecured creditors should be subjected to the same rules. Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

June

- ABI Webinar Examining the Supreme Court's Ruling in the RadLAX Case

     June 26, 2012

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 12-15, 2012 | Bretton Woods, N.H.

- Southeast Bankruptcy Workshop

     July 25-28, 2012 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

September

- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.

October

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

BIG U.S. BANKS FACE TOUGHER STANDARDS



The Federal Reserve today outlined a multi-pronged plan to place the nation's largest banks under increasingly stringent capital requirements to guard the financial system from risks posed by "too big to fail" companies, the Wall Street Journal reported today. Fed officials said that they hope to act in the coming months on four separate proposals aimed at the eight largest U.S. firms considered "systemically important" to the global economy, including Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co. Fed Gov. Daniel Tarullo, the agency's point man on regulation, said that regulators could soon propose a higher leverage ratio, which is expected to fall between 5 and 6 percent, for the largest banks. This capital measure gauges equity against total assets and is favored by some regulators as a better measure of a bank's ability to withstand stress. Regulators are also working on a requirement that these banks hold a minimum amount of long-term debt, a separate charge based on a firm's reliance on volatile forms of short-term funding, and a special surcharge agreed upon by international regulators. Read more. (Subscription required.)

COMMENTARY: THE CORKER-WARNER HOUSING REFORM WON'T WORK



The Corker-Warner bill, introduced last week by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), proposed a new government agency to insure mortgages, but it will only ensure the same loose lending that caused the last financial crisis, according to a commentary in today's Wall Street Journal. The bipartisan bill's intent is to eliminate Fannie Mae and Freddie Mac, the two government-sponsored mortgage giants that cratered in 2008 and were bailed out by taxpayers to the tune of $180 billion. The recent financial crisis was the result of government housing policies. Beginning in 1992, these policies required Fannie and Freddie to lower their underwriting standards so people who otherwise lacked the credit standing or financial resources could purchase homes. Fannie and Freddie could take on the risks of these loans only because of the implicit backing of the federal government. The agency proposed in the Corker-Warner bill will establish a new government agency, the Federal Mortgage Insurance Corp. (FMIC), to insure mortgage-backed securities and wind down Fannie and Freddie. As with Fannie and Freddie, investors in mortgage-backed securities will not have to worry about the quality of the underlying mortgages. A major feature of Corker-Warner is the requirement that the private sector share the insurance risk with the new FMIC. The bill specifies that a private risk-sharer like a bond insurer must take the first losses, no less than 10 percent on any securitized pool of mortgages. This is intended to protect the FMIC against losses, though it works only if the quality of the mortgages remains high. Read the full commentary. (Subscription required.)

NORTH LAS VEGAS EMINENT DOMAIN PROPOSAL FACES PUSHBACK FROM HOMEOWNER



A controversial eminent domain proposal rolled out in North Las Vegas, Nev., to help underwater homeowners with their mortgages is facing pushback from an unlikely party—a homeowner living in the city, Housingwire.com reported yesterday. Gregory Smith sued North Las Vegas, claiming that an eminent domain strategy, proposed locally with the help of consultancy firm Mortgage Resolution Partners (MRP), violates several portions of the U.S. and Nevada State Constitutions. The plan follows a similar pattern that MRP has proposed in other jurisdictions — namely that homeowners who are underwater in the city can be helped by giving local governments the power of eminent domain to seize property rights, thereby allowing officials to grant upside-down borrowers a principal reduction after taking over their loans. In his lawsuit, Smith suggests that this type of intervention into investor property rights violates the Fifth and Fourteenth Amendments of the Constitution, along with various sections of the Nevada Constitution. Furthermore, Smith claims that the proposal disrupts contractual rights granted to all U.S. citizens through the Constitution, as well as the Commerce Clause, which governs interstate commerce. If such a plan were to stick and make it into law, Smith says roughly 5,000 local mortgages would qualify, with MRP targeting loans that are current, underwater and owned by private securitization trusts. This is not the first time MRP has managed to stir up debate in local municipalities: San Bernardino County, Calif., previously debated the strategy before killing off the idea. Read more.

COMMENTARY: WIELDING DERIVATIVES AS A TOOL FOR DECEIT



Derivatives are not always “financial weapons of mass destruction,” as Warren Buffett famously called them, but they are often weapons of mass deception, according to an editorial in Friday's New York Times. Sometimes, banks use derivatives they create to help their clients deceive the public, according to the editorial, and at other times they enable the banks to deceive those clients. The latest revelation of deception by derivatives came in Italian government documents leaked this week to two European newspapers, La Repubblica and The Financial Times. The Financial Times reprted that it appeared as though Italy had used derivatives in the 1990s to allow it to make its budget deficit seem smaller, thus enabling it to qualify for admission to the euro zone. The report added that it appeared that those derivatives, now restructured, might be exposing Italy to a loss of 8 billion euros ($10.4 billion). Such deception by derivatives is hardly new, according to the editorial. Enron used derivatives called “prepaid forward” contracts to hide debt in a way that made corporate cash flow appear better, something the company thought was necessary to impress the bond rating agencies. The banks have done an excellent job, according to the editorial, of persuading the Financial Accounting Standards Board, which sets the rules, not to mess with them. Rather than force the banks to put the assets and liabilities on their balance sheets, as is required in most other countries, the board has proposed additional disclosures that might make it easier to discern the reality. Read the full editorial.

NEW ABI LIVE WEBINAR ON JULY 15 TO FOCUS ON THE § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES



Utilizing a case study, ABI's panel of experts will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place on July 15 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE NORTHEAST BANKRUPTCY CONFERENCE ON JULY 12



The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS



In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.

ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!



Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!

NEW CASE SUMMARY ON VOLO: MARSHALL V. MARSHALL (IN RE MARSHALL; 9TH CIR.)



Summarized by Lovee Sarenas of the U.S. Bankruptcy Court for the Central District of California

The Ninth Circuit upheld the decision of the district court to affirm three decisions of the bankruptcy court involving the chapter 11 bankruptcy estate of Howard Marshall III and his wife, Ilane, that was appealed by Pierce Marshall. First, the Ninth Circuit held that a party has no due process right to a random assignment of a bankruptcy case absent a showing of bias or partiality by the presiding judge. Thus, assigning the debtor's chapter 11 case to Judge Bufford, who was the presiding judge in the related chapter 11 case of Vickie Marshall, was not an error. The appellate court rendered a broad view of "related cases" as defined under the bankruptcy court's local rule 1015-2(a). The circuit court rejected evidence of bias solely from the bankruptcy judge's adverse decisions in the Vickie Marshall bankruptcy case against Pierce for purposes of 28 USC sec. 455. Without more, the Ninth Circuit opined that decisions based on facts shown or events that took place during the court's decision do not demonstrate bias.

There are more than 900 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FURTHER EXAMINATION OF THE CORKER-WARNER BILL

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post takes a closer look at the bill introduced last week by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.). The post finds that the bill's explicit guarantee of backing of risky mortgages is better than the implicit one Fannie and Freddie had, but a more fundamental approach would be to demand that financial actors internalize and capitalize the risks themselves.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- abiLIVE Webinar

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

     July 18-21, 2013 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.

- Southwest Bankruptcy Conference

    August 22-24, 2013 | Incline Village, Nev.

September

- ABI Endowment Golf & Tennis Outing

    Sept. 10, 2013 | Maplewood, N.J.

- ABI Endowment Baseball Game

    Sept. 12, 2013 | Baltimore, Md.

- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

    Sept. 18-19, 2013 | New York

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

November

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

COMMENTARY: HOUSING PRICES STABILIZING WHERE LENDERS CAN ENFORCE CONTRACTS



Data from Case-Shiller, Lender Processing Services and other housing trackers suggest that the housing rebound is strongest in states where lenders can enforce contracts, according to an editorial in yesterday's Wall Street Journal. The editorial refers to the difference between "nonjudicial" states that have streamlined foreclosure procedures and the 23 "judicial" states that force lenders to go to court to enforce mortgage contracts. Prices are stabilizing in the former but still faltering in much of the latter. Housing markets cannot clear until lenders can foreclose on delinquent borrowers and prices fall far enough to attract buyers who can afford the mortgage payments, according to the editorial. Politicians and housing lobbyists decry nonjudicial foreclosure as unfair to borrowers, but every homeowner in any state has the right to challenge a foreclosure in court, regardless of whether they live in a nonjudicial state. The main difference is that in a judicial state the lender has to file a lawsuit to initiate a foreclosure, which can take months or years to settle depending on the state. Lender Processing Services estimates that the foreclosure inventory in judicial states is more than triple that of nonjudicial states. The Mortgage Bankers Association's latest National Delinquency Survey, which ended September 30, showed that of the top five states with the highest share of loans in foreclosure, four were judicial: Florida (13.04 percent), New Jersey (8.87 percent), Illinois (6.83 percent) and New York (6.46 percent). Read the full editorial. (Subscription required.)

ANALYSIS: SHORT SALES IN CALIFORNIA SURPASS SALES OF FORECLOSED HOMES



Real estate research firm DataQuick is reporting that short sales in California in recent months have surpassed sales of foreclosed homes for the first time since the start of the housing crash in 2007, the Los Angeles Times reported yesterday. The transactions now represent about a quarter of the market, a surge driven by rising home prices, government crackdowns on foreclosures and banks' increasing capacity to process the deals. Lenders have revamped short sale departments, streamlining paperwork, creating new software systems and enlisting newly formed companies as liaisons with borrowers. Some institutions are even paying homeowners sizable sums to move, similar to "cash for keys" arrangements used as an alternative to eviction in foreclosures. Bank of America pays up to $30,000 in relocation assistance for certain successful short sales. JPMorgan Chase will pay up to $35,000. Wells Fargo offers similar aid, though it declined to specify an amount. Read more.

LENDER REVIEW OF BORROWERS TIGHTENED UNDER CFPB'S NEW MORTGAGE RULES



The U.S. Consumer Financial Protection Bureau issued a rule today that for the first time forces lenders to verify borrowers’ ability to repay mortgages by confirming income and assets, Bloomberg News reported. The rule, mandated by Congress in response to lax underwriting standards before the 2008 financial crisis, will also offer some legal protection for lenders who follow guidelines for qualified mortgages. The measure also insulates issuers of qualified mortgages at prime interest rates from future lawsuits. The qualified-mortgage rule will apply to home loans in the underwriting phase, whether made by banks such as Bank of America Corp. and/or non-depository originators. The rule on repayment ability is the first in a series of rules that the CFPB will issue that will shape the post-crisis mortgage market. The bureau will unveil rules on mortgage servicing at a Jan. 17 hearing in Atlanta. Read more.

CONSUMER DEBT INCREASES ON MORE CAR, SCHOOL LOANS



The Federal Reserve issued a report on Tuesday showing that consumers increased their borrowing in November by $16 billion from October to a seasonally adjusted record of $2.77 trillion, the Associated Press reported yesterday. Borrowing that covers autos and student loans increased $15.2 billion. A category that measures credit card debt rose just $817 million. The sharp difference in the borrowing gains illustrates a broader trend that began during the Great Recession. Four years ago, Americans carried $1.03 trillion in credit card debt, an all-time high. In November, that figure was 16.5 percent lower. At the same time, student loan debt has increased dramatically. The category that includes auto and student loans is 22.8 percent higher than in July 2008. Read more.

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: FEE AGREEMENT PUTS LAW FIRM IN TRUSTEE'S SIGHTS



Law firm Kaye Scholer LLP and financial advisor Capstone Advisory Group LLC are in the sights of a U.S. Trustee aiming to claw back $12 million for an undisclosed agreement to share fees awarded in the now-completed bankruptcy of GSC Group Inc. In their latest video, Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle pose the question of whether the dispute involves a serious ethical lapse or a hypertechnical reading of an ambiguous statute. Click here to view.

CHAPTER 9s, NONPROFITS AND OTHER NONTRADITIONAL RESTRUCTURING PROCESSES AMONG TOPICS TO BE DISCUSSED AT ABI'S 31ST ANNUAL SPRING MEETING



The 2013 Annual Spring Meeting, to be held April 18-21, 2013 at the Gaylord National Resort and Convention Center in National Harbor, Md., features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates on Hot Business and Consumer Topics

• Mediation: The Rational Alternative

• Creditors’ Committees and the Role of Indenture Trustees and Related Issues

• Current Issues for Financial Advisors in Bankruptcy Cases

• The Individual Conundrum: Chapter 7, 11 or 13?

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• Law Firm Bankruptcies

• How to Be a Successful Expert

• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Register today!

ABI IN-DEPTH

ABI LIVE WEBINAR: REVISITING RADLAX AND HALL- NEW LEGAL AND PRACTICAL IMPACT OF THE DECISIONS



See why this was the top-rated panel at the ABI Winter Leadership Conference last month! Join the expert panel on Feb. 19 from 12:00-1:15pm EST as the summarize and discuss the legal impact and practical implications of the Supreme Court’s 2012 decisions in Radlax and Hall. Participants include:

• Susan M. Freeman of Lewis and Roca LLP (Phoenix)

• Adam A. Lewis of Morrison & Foerster LLP (San Francisco)

• Prof. Charles J. Tabb of the University of Illinois College of Law (Champaign, Ill.)

• Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

LATEST CASE SUMMARY ON VOLO: ELLIOT V. SUTTON (IN RE ELLIOTT; 5TH CIR.)



Summarized by Brendan Gage, U.S. Bankruptcy Court, Eastern & Western Districts of Arkansas

Affirming the judgment of the District Court for the Western District of Louisiana, the Fifth Circuit held that a bankruptcy court may sua sponte convert a debtor’s chapter 13 case to a case under chapter 7 even when the debtor opposes conversion and moves to dismiss the case pursuant to § 1307(b).

There are more than 700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: EXAMINING CALPERS’ LOSS IN THE SAN BERNARDINO CHAPTER 9 CASE



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new post examines the decision of a bankruptcy judge to deny the motion of the California Public Employees’ Retirement System (CALPERS) that it filed in the bankruptcy proceedings of the city of San Bernardino to have the automatic stay lifted with respect to overdue pension payments. Bankruptcy Judge Meredith Jury based her denial partly on the city’s representations that forcing the payment of outstanding CALPERS obligations at this time would be a “death knell” for the city.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

After Stern, bankruptcy courts do not have the constitutional authority to enter final judgments on fraudulent conveyance claims.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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Join our networks to expand yours.

2013

January

- Western Consumer Bankruptcy Conference

     January 21, 2013 | Las Vegas, Nev.

- Rocky Mountain Bankruptcy Conference

     January 24-25, 2013 | Denver, Colo.

February

- Caribbean Insolvency Symposium

     February 7-9, 2013 | Miami, Fla.

- ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions

     February 19, 2013

- VALCON 2013

     February 20-22, 2013 | Las Vegas, Nev.

March

- 37th Annual Alexander L. Paskay Seminar on Bankruptcy Law and Practice

     March 7-9, 2013 | St. Petersburg, Fla.

- Bankruptcy Battleground West

     March 22, 2013 | Los Angeles, Calif.

April

- Annual Spring Meeting

     April 18-21, 2013 | National Harbor, Md.

U.S. FORECLOSURE FILINGS DOWN 10 PERCENT IN JULY



Market researcher RealtyTrac reported that the number of U.S. properties with foreclosure filings slipped 10 percent in July from a year earlier, the Wall Street Journal reported today. There were 191,925 U.S. properties with default notices, scheduled auctions and bank repossessions in July, a 3 percent decrease from the prior month. One in every 686 U.S. housing units had a foreclosure filing last month, RealtyTrac reported. U.S. foreclosure activity has now decreased on a year-over-year basis for 22 consecutive months, according to the report. The latest month's decline was driven primarily by a 21 percent decline in bank repossessions from a year earlier. Properties starting the foreclosure process increased on an annual basis for the third straight month in July, rising 6 percent last month. Foreclosure starts rose on a year-over-year basis in 27 states. Read more. (Subscription required.)

CONSUMERS CUT BACK ON CREDIT CARD USE IN JUNE, BUT OVERALL BORROWING CONTINUES TO RISE



Americans cut back on credit card use in June, a sign that high sustained unemployment and slow growth have made some more cautious about spending, the Associated Press reported yesterday. Still, total consumer borrowing increased as many took on loans to buy cars and attend school. Consumer borrowing rose by $6.5 billion from May to June totaling $2.58 trillion, the Federal Reserve said on Tuesday. Auto and student loans rose by $10.2 billion to $1.71 trillion in June. Credit card debt fell $3.7 billion to $865 billion. Household debt, including mortgages and home equity lines of credit, has declined for 16 straight quarters to $12.9 trillion in March, according to the Fed. That is down from $13.8 trillion in March 2008. Read more.

REPORT: WEAK CREDIT QUALITY OF U.S. CITIES IS BIGGER CONCERN THAN BANKRUPTCIES



Morgan Stanley's municipal debt strategists said on Tuesday that weaker local credit quality should be a greater concern for municipal debt investors than chapter 9 filings, Reuters reported on Wednesday. "Our updated case study analysis of recent chapter 9 filings affirms that bankruptcies may pick up somewhat, but the ongoing deterioration of local credit quality is a more relevant systemic risk," Morgan Stanley Research's Michael Zezas and Meghan Robson said in a report. The researchers said that chapter 9 filings and municipalities flirting with bankruptcy are "likely to remain modest and idiosyncratic." Even so they urged scrutinizing state and local credits, adding that they favor enterprise revenue debt over general obligation bonds. Read more.

ANALYSIS: UPPER-MIDDLE-INCOME HOUSEHOLDS SEE BIGGEST JUMPS IN STUDENT LOAN BURDEN



According to a Wall Street Journal analysis of recently released Federal Reserve data, households with annual incomes of $94,535 to $205,335 saw the biggest jump in the percentage of households with student-loan debt from 2007-10, the latest figures available. The Journal's analysis defined upper-middle-income households as those with annual incomes between the 80th and 95th percentiles of all households nationwide. Among this group, 25.6 percent had student loan debt in 2010, up from 19.5 percent in 2007. For all households, the portion with student loan debt rose to 19.1 percent in 2010 from 15.2 percent in 2007. The amount borrowed by upper-middle-income families, meanwhile, has soared. They owed an average of $32,869 in college loans in 2010, up from $26,639 in 2007, after adjusting for inflation, according to the Journal's analysis. Read more. (Subscription required.)

ANALYSIS: RECESSION GENERATION OPTS TO RENT – NOT BUY – BIG TICKET ITEMS



Confronting a jobless rate above 8 percent since 2009 and student-loan debt hitting about $1 trillion, 20-to-34-year-olds are renting apartments, cars and even clothing to save money and stay flexible, Bloomberg News reported yesterday. As the Great Depression shaped the attitudes of a generation from 1929 until the early years of World War II, so have the financial crisis and its aftermath affected the outlook of young consumers, said Cliff Zukin, a professor of public policy and political science at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. College graduates earned less coming out of the recession, according to a May study by the John J. Heldrich Center for Workforce Development at Rutgers. Those graduating during 2009-11 earned a median salary in their starting job $3,000 less than the $30,000 seen in 2007. The majority of students owed $20,000 to pay off their education, and 40 percent of the 444 college graduates surveyed said their loan debt is causing them to delay major purchases such as a house or a car. Read more.

LAX BANKING LAW OBSCURED MONEY FLOW IN STANDARD CHARTERED'S MONEY LAUNDERING CASE



The list of global banks that have been accused in recent years of laundering foreign transactions totaling billions of dollars has been growing — Credit Suisse, Lloyds, Barclays, ING, HSBC — and now Standard Chartered, the New York Times reported today. The details in each case are different, with the international banks suspected of using their American subsidiaries to process tainted money for clients that included Iran, Cuba, North Korea, sponsors of terrorist groups and drug cartels. What the cases have in common is that the accused banks took advantage of a law that was not changed until 2008 and that allowed banks to disguise client identities and move their money offshore. The cases, including one filed this week by New York’s banking regulator against Standard Chartered, also cast a harsh light on just how much activity with Iran was permitted in the years leading up to 2008 and whether the practices had violated the spirit, if not the letter, of the law. Foreign banks until 2008 were allowed to transfer money for Iranian clients through their American subsidiaries to a separate offshore institution. In these so-called U-turn transactions, the banks could provide scant information about the client to their American units as long as they stated they had thoroughly vetted the transactions for suspicious activity. Read more.

LATEST ABI PODCAST EXPLORES HEALTH CARE INSOLVENCIES



ABI Executive Director Samuel J. Gerdano talks with Leslie A. Berkoff of Moritt Hock & Hamroff LLP and Robert A. Guy, Jr. of Frost Brown Todd LLC, the lead editors of ABI's Health Care Insolvency Manual, Third Edition. Berkoff and Guy discuss current issues surrounding health care insolvencies, the new health care law and the need to release this year’s new edition of the Health Care Insolvency Manual. To listen to the podcast, please click here.

For more information and to purchase ABI's Health Care Insolvency Manual, please click here.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: NATIONAL BANK OF ARKANSAS V. PANTHER MOUNTAIN LAND DEVELOPMENT, LLC (IN RE PANTHER MOUNTAIN LAND DEVELOPMENT, LLC; 8TH CIR.)



Summarized by Adam Ballinger of Lindquist & Vennum, PLLP

The Eighth Circuit ruled that the automatic stay does not apply to an action against a debtor's improvement districts formed under Arkansas law because the improvement districts are property of neither the debtor nor the debtors themselves. The doctrine of equitable laches does not apply because there is no showing of detrimental reliance of the debtor upon a party's failure to raise this particular challenge.

Nearly 600 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SURVEY SHOWS EMPLOYEES USE INTERNAL CHANNELS FOR REPORTING MISCONDUCT



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Amid concerns that the SEC whistleblower rules will encourage employees to bypass internal protocols and take allegations of misconduct directly to the Commission, a recent blog post reported on a survey by the nonprofit Ethics Resource Center that found that only one out of six employees ever reported misconduct to regulators or other outside channels.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

The Twombly/Iqbal rule for pleading ‘plausible’ claims has been applied too stringently in dismissing avoidance actions for failure to state a claim.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

September

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.

- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

     September 19-20, 2012 | New York, N.Y.

- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

U.S. CONSUMER SPENDING FALLS IN JUNE; INCOMES RISE



Consumer spending in the U.S. fell slightly in June and marked the second straight decline even though wages rose sharply, according to the latest government data, MarketWatch.com reported. Spending fell less than 0.1 percent last month on a seasonally adjusted basis, the Commerce Department said today, and spending for May was revised down slightly to a 0.1 percent decrease. Personal income, meanwhile, jumped 0.5 percent in June. Since incomes rose faster than spending, the personal savings rate rose to 4.4 percent from 4.0 percent. Read more.

REPORT: COMPLETED U.S. FORECLOSURES HOLD STEADY IN JUNE



CoreLogic reported today that the amount of completed U.S. home foreclosures held steady in June compared to the month before, although the level was down from a year ago, according to Reuters. There were 60,000 finished foreclosures in June, the same as in May and down from the 80,000 seen in June 2011, CoreLogic said. Since the financial crisis erupted in September 2008, there have been about 3.7 million foreclosures.
About 1.4 million homes, or 3.4 percent of homes with a mortgages, were in some stage of the foreclosure process. That was down from 1.5 million homes, or 3.5 percent, a year ago and unchanged from May. The five states with the highest number of foreclosures in the last 12 months were California, Florida, Michigan, Texas and Georgia. Those states alone accounted for 48.4 percent of all completed foreclosures. Read more.

ANALYSIS: CALIFORNIA LURING MOST MUNICIPAL FUND INVESTMENT SINCE 2007, DEFIES BANKRUPTCY WAVE



California municipal funds are garnering the most demand since 2007, helping fuel the biggest rally in the state's debt since May and allaying concerns that bankruptcies might curb the appetite of individual investors, Bloomberg News reported yesterday. With local yields close to their lowest rates since the 1960s, investors seeking tax-free income are willing to take the added risk of debt from Standard & Poor's lowest-rated U.S. state. Bond funds focusing on California issuers have added assets for 18 straight weeks, the longest streak since 2007, according to Lipper US Fund Flows data. The funds increased even as three municipalities in the past six weeks from the most-populous state decided to file for bankruptcy protection, including San Bernardino and Stockton, a city east of San Francisco that is trying to set a precedent by imposing losses on bondholders. Read more.

MUNI RATES EXAMINED FOR SIGNS OF RIGGING



Attention has swung to a set of benchmark interest rates that help determine how much cities and states pay to borrow money in the bond market, the New York Times reported today. The scrutiny of the Municipal Market Data (or M.M.D.) index comes on the heels of revelations that a broader financial industry benchmark, the London Interbank Offered Rate (Libor), was manipulated by banks before and after the financial crisis. Libor is used to help determine the costs of products like mortgages and credit cards. Thomson Reuters, which owns Municipal Market Data, said yesterday that it "has been involved in discussions with regulators" about the rates, which influence the prices of bonds and derivatives in the $3 trillion municipal bond market. The M.M.D. rates influence a much smaller market than Libor, but it is one that is crucial to how cities and states across America borrow money to maintain roads and bridges and provide essential services such as public education. The scrutiny of the M.M.D. rates comes as a number of other events are drawing attention to the transparency and fairness of the municipal bond market. Three former bankers at UBS yesterday went on trial in Manhattan on charges that they had colluded to steer municipal bond transactions to specific banks in exchange for kickbacks. Separately, the Securities and Exchange Commission will release a lengthy report soon that recommends reforms for the municipal bond market so that investors are put on more even footing. Read more.

ANALYSIS: THOUGH SPLITTING UP WAS CONSIDERED, BANK OF AMERICA EXECUTIVES VOTED AGAINST THE IDEA



Long before Sanford Weill suggested last week that big banks should split up, Bank of America Corp. executives and directors considered the idea and then decided against it, the Wall Street Journal reported yesterday. While the Charlotte, N.C.-based company's exploration of a possible breakup in 2010 and 2011 came and went, it illustrates the powerful and contradictory forces buffeting giant financial companies even as the financial crisis recedes. Stung by public revulsion to the bailouts of 2008, regulators are pushing rules that would tax the biggest firms based on size. Big-bank share prices have tumbled, and even some bankers who spent their careers assembling sprawling conglomerates are questioning whether combining traditional lending with trading and deal-making makes sense. At Bank of America, Chief Executive Brian Moynihan and his team looked at a possible bankruptcy of Countrywide Financial Corp., the troubled mortgage operation it purchased in 2008. Management also studied whether it made sense to break off Merrill Lynch, the securities firm it purchased in 2009. Moynihan ultimately recommended to his board that neither action made sense. The company decided that Merrill had become too big of a profit center and that splitting it off could expose the brokerage firm to the sort of funding problems that killed off other Wall Street firms in 2008. Meanwhile, it felt that a bankruptcy of Countrywide might invite more legal and reputational troubles for Bank of America while exposing other subsidiaries to problems. Read more. (Subscription required.)

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: IN RE PHILADELPHIA NEWSPAPERS LLC (3D CIR.)



Summarized by Suzanne Iazzetta of Becker Meisel LLC

The Third Circuit ruled that when deciding whether an appeal is equitably moot, a court must consider all five factors set forth in In re Continental Airlines, 91 F.3d 553, 560 (3d Cir. 1996). In particular, a court must consider whether allowing the appeal to go forward would undermine the plan, an analysis that the court must undertake even if the plan has already been "substantially consummated."

Additionally, under applicable Pennsylvania law, the debtor’s post-petition publication of an article that included hyperlinks to a previously published allegedly defamatory article was not a "republication" such that it could be deemed a separate act of defamation. Therefore, the tort claimant did not sustain its burden to show its entitlement to a § 503(b)(9) administrative expense claim based on the debtor's post-petition publication.

More than 570 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: HOW LONG UNTIL RESCAP LIQUIDATES?



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the $109 million loss by Rescap in the first 45 days of its chapter 11 case and ponders whether there will be a liquidation in the case.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

The Twombly/Iqbal rule for pleading ‘plausible’ claims has been applied too stringently in dismissing avoidance actions for failure to state a claim.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

IS YOUR ABI MEMBERSHIP PROFILE CURRENT?



Keeping a current profile will allow you to benefit from one of ABI's most important services - networking. When you update your profile, you are putting your most valuable information in the membership directory. Be sure to include your areas of expertise, firm information, education and join any other committees that are of interest. Click here to update your profile.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

September

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.


- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

     September 19-20, 2012 | New York, N.Y.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

REPORT: STUDENT BORROWERS RETREAT FROM HOME BUYING



The Federal Reserve Bank of New York issued a report yesterday saying that Americans who borrowed to pay for school are now less likely to have a home mortgage at age 30 than those who never had student debt, a reversal of past trends, the Wall Street Journal reported today. As of late last year, roughly 22 percent of 30-year-olds with a history of student debt—either currently or in the past—owed money on a mortgage, the Fed said. That compares with 24 percent of 30-year-olds who never took out student loans. Similarly, young people with a history of student debt are less likely to have a car loan than those who did not have student loans, the report said. This marks a significant turnabout from recent history. For most of the past decade, student borrowers were much more likely to own a home or car, relative to those without student loans, because they typically were college graduates with higher incomes. But now, student debt could be among the factors holding them back, at least temporarily, the Fed report suggests. The report shows that credit scores for student borrowers have fallen sharply since the recession, likely due to higher average student-debt levels and a rise in delinquencies. Read more. (Subscription required.)

MORTGAGE RELIEF CHECKS GO OUT, ONLY TO BOUNCE



Many struggling homeowners received checks stemming from a $3.6 billion settlement with the nation’s largest banks over wrongful evictions and other abuses, only to find that the checks were bouncing, the New York Times DealBook Blog reported yesterday. It is unclear how many of the 1.4 million homeowners who were mailed the first round of payments covered under the foreclosure settlement have had problems with their checks. But housing advocates from California to New York and even regulators say that in recent days frustrated homeowners have bombarded them with complaints and questions. The mishap is just the latest setback to troubled homeowners. It took more than two years to resolve a federal investigation into foreclosure abuses, and even after the settlement was reached in January, the checks were delayed for weeks. Read more.

RISING BANK PROFITS TEMPT A PUSH FOR TOUGHER RULES



Banks have been reporting steady growth in earnings since the financial crisis, but their ballooning bottom lines could embolden lawmakers and regulators who want to introduce additional measures to overhaul the banking system, the New York Times DealBook blog reported yesterday. After the financial crisis, many officials involved in the regulatory revamping feared that tougher rules, like caps on bank assets, could destabilize the financial system and harm economic growth. It is a view that prominent bankers and lobbyists have also voiced. Despite industry opposition to the new rules, the buoyant bank profits could add to the ammunition that influential figures in Washington, D.C., are using to advocate for more radical ideas to overhaul the banks. "I hope the regulators move forward with tougher regulations," said Sheila C. Bair, a former chairwoman of the Federal Deposit Insurance Corp. and now a senior adviser at the Pew Charitable Trusts. "This wouldn’t endanger the economic recovery." Read more.

SEC TO MOVE PAST FINANCIAL CRISIS CASES UNDER CHAIRMAN WHITE



Mary Jo White, the first former prosecutor to serve as chairman of the U.S. Securities and Exchange Commission, has pledged to run a "bold and unrelenting" enforcement program at the agency charged with regulating Wall Street, Bloomberg News reported today. With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge. White, who was sworn in last week, has already provided a few signals about what that cause might be. During her Senate confirmation hearing, she said that she intends to focus on high-frequency and automated trading. She has also raised questions about a drop in the number of accounting fraud cases the agency has brought in recent years. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: EASTERBROOK TURNS THE TIDE ON STUDENT LOANS



Why and when U.S.-managed hedge funds can go bankrupt in the Caribbean, but not in the U.S., is the first item discussed on the new bankruptcy video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. The video ends with discussion of an opinion by U.S. Circuit Judge Frank Easterbrook, who's turning the tide against recent decisions that have left former students virtually incapable of shedding education loans in bankruptcy. Click here to watch the video.

Attending ASM? Don't miss Bloomberg's Bill Rochelle moderating the "BK 360 Revisited: ABI Past-Presidents Panel" session at lunch on Saturday from 12:30-2 p.m. ET.

ATTENDING ABI'S ANNUAL SPRING MEETING? MAKE SURE TO DOWNLOAD THE MOBILE APP FOR SMARTPHONES AND TABLETS!



The official Annual Spring Meeting mobile web app, sponsored by Diamond McCarthy LLP, is now available for iOS, Android and Blackberry devices! Utilize the app during ASM this week to view your personal schedule, browse what programs are taking place or search for information related to the meeting. The mobile web app stores the schedule data locally on your phone for offline access, too.

To take advantage of the ASM web app, bookmark the following address on your device’s browser: http://31stannualspringmeeting2013.sched.org/mobile

LIVE WEBSTREAMS OF THE GREAT DEBATES AND ABI'S CHAPTER 11 REFORM COMMISSION HEARING AVAILABLE TOMORROW FROM THE ANNUAL SPRING MEETING!



17TH ANNUAL GREAT DEBATES

Starting at 8:30 a.m. EST, the 17th Annual Great Debates will be streamed live at the following address: http://www.abiworld.org/debate13/

There will be three debates moderated by Jeffrey N. Pomerantz, ABI VP-Education, of Pachulski Stang Ziehl & Jones LLP (Los Angeles):

I. Past Presidents’ Debate

Resolved: The Bankruptcy Code should be revised to eliminate a debtor in possession's and trustee's ability to recover preferential transfers.

Pro: John D. Penn

Haynes and Boone LLP; Fort Worth

Con: Andrew W. Caine

Pachulski Stang Ziehl & Jones LLP; Los Angeles

II. Judicial Debate

Resolved: A claim against the debtor’s estate, transferred to a third party, should be treated the same as if in the hands of the original holder.

Pro: Hon. Arthur J. Gonzalez

New York University School of Law; New York

Con: Hon. Kevin J. Carey

U.S. Bankruptcy Court (D. Del.); Wilmington

III. Consumer Debate

Resolved: An attorney in a consumer case should be able to limit the scope of her employment.

Pro: Brian Michael Shockley

Clark & Washington, PC; Atlanta

Con: Pamela J. Griffith

Office of the U.S. Trustee; Washington, D.C.

ABI's CHAPTER 11 REFORM COMMMISSION HEARING AT 1 P.M. EST

There will also be a live webstream available on the ABI Chapter 11 Reform Commission's site (http://commission.abi.org) of the hearing tomorrow starting at 1 p.m. EST. Prepared witness testimony will also be linked to the site at that time.

Witnesses set to testify at the hearing include:

Panel I:

Wilbur L. Ross of WL Ross & Co. (New York)

Panel II (Bankruptcy Judges’ Panel):

Hon. Dennis R. Dow (W.D. Mo.)

Hon. Barbara J. Houser (N.D. Texas)

Hon. Pamela Pepper (W.D. Wis.)

Panel III:

Holly Felder Etlin of AlixPartners LLC (New York)

Daniel F. Dooley of MorrisAnderson (Chicago)

John M. Haggerty of Argus Management (Grafton, Mass.)

ABI IN-DEPTH

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CONSUMER CLASS ACTIONS



Class action lawsuits in chapter 13 cases are becoming more prevalent. Are you wondering whether your client's claims would be better pursued in a class action? If your client is a defendant in a consumer class action, do you know what your client's best defenses are against class certification? ABI's panel of experts on May 29 from 1-2:15 p.m. ET will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases by highlighting two recent appeals court decisions. Special ABI member rate available! Click here to register.

ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO



ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.

LATEST CASE SUMMARY ON VOLO: THOMAS V. BENDER (IN RE THOMAS; 11TH CIR.)



Summarized by Melissa Youngman of McCalla Raymer LLC



The Eleventh Circuit found no reversible error in the lower court's holding that proceeds from a post-petition real estate deal arising from a pre-petition option contract constituted property of the debtor's bankruptcy estate, pursuant to 11 U.S.C. § 541.

There are more than 800 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SMALL BANKS WOULD BENEFIT FROM BIG-BANK BREAKUPS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Taking on the size of firms that put our financial system at risk is the only way to eliminate unfair competitive advantages, unleash free markets and allow community banks to thrive, according to a recent blog post.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

TEE OFF ON THE NEW ABI GOLF TOUR!



ABI offers conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour, which kicked off this morning at ABI’s Annual Spring Meeting, is designed to enhance the golfing experience for serious golfers while still offering a fun networking opportunity for players of any ability. As opposed to the format used at ABI’s regular conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will be randomly grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, which will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

ABI Quick Poll

The scope of protection of "financial contracts" in bankruptcy should be rolled back to what it was before BAPCPA expanded it in 2005.

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INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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2013

May

- "Nuts and Bolts" Program at NYCBC

     May 15, 2013 | New York, N.Y.

- ABI Endowment Cocktail Reception

     May 15, 2013 | New York, N.Y.

- New York City Bankruptcy Conference

     May 16, 2013 | New York, N.Y.

- Litigation Skills Symposium

     May 21-24, 2013 | Dallas, Texas

- ABI Live Webinar: Consumer Class Actions

     May 29, 2013

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

     June 13-16, 2013 | Grand Traverse, Mich.

- INSOL’s Latin American Regional Seminar

     June 13, 2013 | São Paulo, Brazil

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

     July 18-21, 2013 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.